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James Ivory and Ismail Merchant enjoyed a long, fruitful partnership making films independently of the major studios for an international market. Merchant died in 2005, but Ivory continues to produce films under the Merchant Ivory banner. After gaining international attention and acclaim in 1979 for The Europeans, the team became well known for sumptuous adaptations of English literary classics such as Room with a View and Howards End. However, Merchant-Ivory Productions had been formed in India in 1961 where the company produced films dealing with cultural differences and class relations between Westerners and Indians. Bombay Talkie was the fifth feature film to be produced by the team and written by Ruth Prawer Jhabvala, who had been part of Merchant Ivory Productions since the beginning. Bombay Talkie, which cost about $200,000, was funded by several individual investors, including Joseph Saleh, a Jewish Iraqi businessman who had once worked for Columbia Pictures.

Released in 1970, the film represents the tail end of Merchant Ivory's Indian period. Merchant, Jhabvala, and Ivory all had ties to India: Merchant was born in Bombay; Jhabvala, who was born in Germany and grew up in England, had moved to New Delhi after marrying Indian architect Cyrus Jhabvala; and Ivory had become enchanted with Indian art and culture after discovering Indian miniatures. The trio first collaborated on a film version of Jhabvala's novel Householder and continued to produce films with Indian settings and storylines throughout the 1960s.

Bombay Talkie uses a destructive love affair between an English novelist and an Indian movie star to call attention to the clash of values between Western and Eastern cultures. Jennifer Kendal and Shashi Kapoor, who were married in real life, star as the mismatched lovers Lucia and Vikram. Lucia meets the handsome Bollywood star when her friend, Hari, brings her to the set of Vikram's latest musical because she is looking for inspiration for her next romance novel. Hari, who harbors strong romantic feelings for Lucia, hopes to impress her with his "serious" writing, but she is taken with Vikram almost immediately. She has little regard for Vikram's position as a married man and insults his wife, Mala, with her lack of understanding of social customs and considerations. Lucia and Vikram's affair is interrupted when Anjana Devi tells the selfish young woman's fortune, declaring that she is a destructive force in the lives of those she loves. Lucia tries to cleanse herself of her self-centered desires by falling under the spell of a guru, but the change of heart is short lived. Anjana's prediction turns out to be true: Lucia destroys Hari by turning him into a lovesick devotee who caters to her unreasonable requests; she causes Vikram to damage his career by encouraging his unprofessional behavior; she is alienated from her daughter whom she has sent to a private school in Switzerland; and, in the end, she wreaks havoc on Vikram's family life.

With its lurid love affair and emotionally driven characters, Bombay Talkie can be viewed on its own merits as a melodrama. But, it is more than just a tragic storyline about a doomed romance, or a frank depiction of cultural differences and related social issues. It is also an ode to Bollywood decades before commercial Indian cinema became popular in the West. The title itself pays homage to Indian cinema because sound movies were called talkies in Bombay during the 1970s. Thus, the viewer is immediately made aware of the medium of filmmaking and the industry behind it. The film's self-reflexivity is unique in the work of Merchant Ivory, especially compared to the lush literary dramas that would define their later output.

The opening credits further blur the line between the recreation of the real world inhabited by the characters and the knowledge that that world is as artificial as a Bollywood movie. The credits begin with a bird's eye view of the heart of Bombay as six men run along the street holding a large, bright red billboard, rushing it to its important destination. As the camera gets closer to the billboard, the film's title comes into view. Shots of other vividly colored billboards soon follow, which artfully display the names of the cast and crew. The credits were inspired by the garish billboards that were part of the Bombay cityscape at the time, a detail of the real world that is subverted by the signs' function as movie credits.

The self-reflexive references continue in the opening sequence in which Hari shows Lucia around a movie studio, further reminding the audience that they are watching a film and prompting them to think about the conventions of a Bollywood movie. In the studio, Lucia watches a colorful production number as it is rehearsed and shot on a set that consists of a giant typewriter. Dancers hop gracefully from key to key as Vikram begins to lip-sync to a playback of a catchy tune. Most actors in Bollywood musicals could not sing, so the songs were recorded by professionals known as playback artists or singers. The playback artists were a vital component of the Bollywood system, sometimes becoming popular in their own right. At one point, Vikram moves off-screen so the famous Bollywood dancer Helen can perform a solo. Helen was a famous dancer and actress best known for playing vixens in Bollywood movies. She was at the height of her career at the time of the film's release in 1970 and eventually appeared in over 500 movies. Because her legend was founded on her flamboyant dance sequences and cabaret numbers, which were among the most lavish and expensive in the industry, it was natural to feature this top Bollywood star in the opening musical number. She is a character in the movie-within-a-movie, but she does not appear in the storyline of Bombay Talkie. Continuing the self-reflexive function of this opening sequence, producer Ismail Merchant appears uncredited as a Bollywood producer who takes Lucia and Hari around the studio, telling his guests about the symbolism of the giant typewriter. According to the producer, the characters are writing their own fateful stories as they jump from key to key.

Another recognizable Bollywood star appears in a brief but key scene. Nadira plays Anjana Devi, the fortune-telling ex-actress who reveals to Lucia that she will destroy the people she loves. Most popular during the 1950s and 1960s, Nadira was the first sophisticated vamp in Hindi cinema during an era when women were expected to look demure and play only positive roles. As Anjana, she enjoys the company of young male stars who fawn over her, playing a role that perfectly reflects the star image that made her famous.

The film's major stars, Shashi Kapoor, Jennifer Kendal, and Zia Mohyeddin, along with character actor Utpal Dutt, who plays a disreputable director of smutty films, were part of Merchant Ivory's regular stable of stars during their Indian period. They lack the self-referential nature of Helen, Nadira, and Merchant, because their characters drive the actual storyline of Bombay Talkie. Kapoor, whose brother was a famous comedian and his father a respected theater actor and film producer, had been born into a show business family. Already popular in India, he enjoyed his first international success in the films of Merchant Ivory. Later, he became a director and producer of Bollywood films, forming his own production house, Film Valas.

After the playful opening credits and sequence, the audience has been primed to view Bombay Talkie as more than just a melodrama about the clash of Western and Eastern values and culture. It's also constructed to mirror the themes and stories in popular Bollywood films. For example, both Lucia and Vikram are purveyors of the same style of lurid melodramatic romance that drives Bombay Talkie's central storyline -- he through his roles as the idealized romantic lead in movie musicals and she as a writer of romance novels. Within their own love story, the two re-play these identities on a personal level. Vikram is Lucia's handsome ideal who inflames her romantic passion, like one of his onscreen characters might excite his fans. Lucia engineers or constructs the course of their romance, which includes destructive arguments, sexy love scenes, and dramatic confrontations between Lucia and Vikram's wife, Mala; these scenes are akin to the events in her sensationalistic novel Consenting Adults. Like the fantasy worlds of Vikram's movies and Lucia's novels, the hothouse romance in Bombay Talkie is too volatile and the emotions too extreme to belong to real life. Merchant, Jhabvala, and Ivory are tipping their hats to Bollywood traditions and conventions for escapist musical and melodramatic fare while essentially offering audiences one and the same.

Initially, Bombay Talkie did not enjoy the box office success of the typical Bollywood movie, perhaps due to the unlikable primary characters. Today's audiences, who are more accustomed to unsympathetic protagonists, might enjoy Bombay Talkie for its clever, self-referencing structure and for its fond depiction of one of the world's most prolific film industries.